Kenya and Japan have signed a Ksh22.1 billion ($171.31 million) financing agreement to support local vehicle assembly, reduce energy losses and fund the government’s reform and development agenda.

The Samurai financing facility, signed in Nairobi on June 22, will channel Ksh13.1 billion ($101.55 million) towards promoting local assembly of motor vehicles as part of Kenya’s automotive policy and efforts to create jobs. Another Ksh5 billion ($38.75 million) will fund programmes aimed at reducing energy losses and improving the reliability and affordability of electricity.

About Ksh4 billion ($31 million) will support Kenya’s reform and development agenda by reinforcing essential public services, protecting key social investments and strengthening institutions that underpin sustainable growth.

The latest deal marks Kenya’s first major Samurai financing arrangement and comes at a time when the government is increasingly seeking alternative and cheaper sources of funding amid tightening global financial conditions and growing pressure on public debt.

The financing comes as Kenya seeks to diversify its external borrowing options amid rising debt pressures and difficulties securing a new programme with the International Monetary Fund (IMF).

Negotiations with the IMF have stalled over the treatment of securitised debt, which Nairobi sees as a way of addressing accumulated government arrears. The IMF wants loans backed by future revenues and used to finance infrastructure projects to be treated as sovereign debt, a proposal Kenya has opposed.

Kenya’s $3.6 billion IMF programme expired in April 2025, and the government has been pursuing alternative sources of financing for infrastructure and development projects.

Samurai financing refers to debt denominated in Japanese yen and issued under Japanese regulations. Dr Ruto said the deal underscores Kenya’s efforts to secure cost-effective financing while deepening cooperation with Japan in technology, climate resilience, infrastructure and industry.“We will measure its success not by the commitments we announce today, but by the opportunities we create, the jobs we generate and the improvements we deliver in the lives of our people,” the President said.

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